* BOJ holds off from additional easing as expected
* Yen shows subdued reaction, stays near 7-mth low vs dlr
* Euro eases after Moody's downgrades France
By Masayuki Kitano
SINGAPORE, Nov 20 The yen hovered near a
seven-month low against the dollar on Tuesday and was seen
likely to stay under pressure in the near term amid mounting
political calls for more aggressive monetary expansion.
The yen showed little reaction after the Bank of Japan held
off from additional monetary stimulus as widely expected, with
the central bank holding fire after having eased in September
The dollar last traded at 81.25 yen, down 0.2 percent
from late U.S. trade on Monday. The greenback was within sight
of the previous day's high of 81.59 yen, the dollar's highest
level versus the yen since late April.
Analysts said the yen may have more room to fall in the near
term after having slid over the past week on market expectations
that a likely new Japanese government would push the BOJ toward
more forceful monetary stimulus.
"I think we are going to see new highs. We are going to
break out of the topside of the range around 82. The risk is
that we could extend a little beyond that point," said Todd
Elmer, currency strategist at Citi in Singapore.
It may be prudent, however, to be cautious about selling the
yen based solely on BOJ easing expectations, Elmer said.
"Ultimately, the yen is not strong because policy is
especially tight in Japan, it's strong because policy is
exceptionally easy elsewhere," he said, adding that it remained
unclear whether additional BOJ easing would be effective in
weakening the yen.
Japan's opposition Liberal Democratic Party (LDP), which has
a commanding lead in opinion polls ahead of an election on Dec.
16, has become increasingly vocal in its calls for more monetary
Shinzo Abe, the leader of the LDP, has called on the BOJ for
bolder policy action, including "unlimited easing", pushing
interest rates to zero or below zero and directly underwriting
bonds issued to fund public works spending.
In the latest sign of the LDP's stance on monetary policy,
the Nikkei newspaper reported that the party is likely to
include in its campaign platform a pledge to consider revising a
law guaranteeing central bank independence.
While there is the possibility of the LDP toning down its
rhetoric after the election, such calls for forceful BOJ easing
are likely to persist for now and support the dollar against the
yen, said Rob Ryan, a strategist at RBS.
"I don't see a reversal right now," Ryan said, adding that
the dollar will probably head into the election a bit higher
than where it stands now.
The euro dipped 0.2 percent to $1.2795, having eased
after Moody's cut France's sovereign rating by one notch to Aa1
from Aaa, citing an uncertain fiscal outlook and deteriorating
The single currency's losses were limited, however, with
analysts saying the downgrade did not come as a surprise.